It has been said that experience is simply the name we give our mistakes. This pretty much sums up the distilled wisdom of the typical entrepreneur. If you haven’t failed, you haven’t tried.
If you think about it, the study of entrepreneurship is largely the study of how entrepreneurs learn from failure. We’re talking about supremely self-confident creatures — it can be tough for entrepreneurs to own up to their mistakes. Bankruptcy, market miscalculation, rejection from venture capitalists — these can all be painful and even traumatic experiences. It’s awfully hard to identify important lessons and incorporate them into future endeavours when you’ve been through an emotional wringer.
Fortunately, researchers have started to look at how entrepreneurs learn and, in particular, how they learn from failure. A recent study looked at entrepreneurs’ learning behaviours in relation to the rate at which business failures are experienced — academics call this “failure velocity.” The researchers figured that when an entrepreneur experiences failure rather infrequently — that’s low failure velocity — then the learning takeaways simply don’t stick. And when failures happen repeatedly, the emotional noise that the entrepreneur has to deal with outweighs any motivational and informational beneﬁts.
What Happens When Failures Pile Up?
The researchers surveyed entrepreneurs in the IT space in the United States and Finland. When they crunched and analyzed the numbers, they came up with an inverted U-shape. With low failure velocity, entrepreneurs remained complacent and lacked motivation to continue learning. With high failure velocity, the entrepreneurs were too distracted by negative emotions. There was a sweet spot, with just enough of an edge to keep the entrepreneur hungry to harvest and incorporate new insights.
To be sure, the entrepreneurs have some agency. In particular, the researchers found that the ability of entrepreneurs to regulate their emotions can have a big effect on how well they can learn from their failures when those failures pile up. Legendary risk-takers such as Richard Branson and Steve Jobs were able to maintain a level of learning as their failure velocity increased because of their emotional intelligence.
So what should entrepreneurs do? Researchers have a few suggestions. One is visualization: instead of imagining yourself winning an Olympic bobsled medal, create mental pictures of business failure as well as the coping processes that were used.
Another is vicarious learning: basically, learn from the failure of others. Maybe it’s a peer who’s gone through a rough business patch or a mentor who can coach you through some challenge. You can definitely experience vicarious learning at a gathering such as FailCon, where experienced entrepreneurs openly discuss their own mistakes and failures.
And a third option is training in emotional intelligence. Take a professional program to help you develop your emotional competencies.
The message here is: Fail away, and keep cool.